Justice minister says PACCAR legislation ‘highly unlikely’ to be retrospective in effect
Justice minister Sarah Sackman KC MP has said the government will not be rushed into taking action to address the uncertainty created by the PACCAR judgment, adding that it is “highly unlikely” any new legislation would apply retrospectively.
Speaking at a Westminster Hall debate tabled by Conservative MP Sir Julian Smith to discuss the Civil Justice Council’s (CJC) review of litigation funding, Sackman said the government recognised the “huge economic function” performed by third-party litigation funding.
The minister for courts and legal services, who was previously a practising barrister, said funding had been crucial in supporting access to justice in claims relating to the Post Office scandal, equal pay, environmental challenges, and consumer actions against multinational companies.
She told MPs:
“It also performs a huge economic function. Along with the quality and calibre of our judiciary and legal services, third-party funding is an important factor in attracting international business to England and Wales as a jurisdiction of choice… because [it] is also used in high-value commercial cases.”
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Sackman noted that legal services contributed £42 billion to the UK economy in the previous year but said the Supreme Court’s PACCAR ruling had created uncertainty for both funders and claimants.
“There’s a very real risk that funders are beginning to pivot away from London, from England and Wales, and look at other jurisdictions such as New York, Paris [and] Singapore more favourably. In short, that’s not good for the UK plc,” she said.
The minister described the situation as an opportunity to consider how best to reform the litigation funding regime:
“The PACCAR judgment and the [CJC] report that followed present an opportunity for [debate] as to what it would look like to reverse PACCAR: do we want to go back to exactly the regime that applied before, [or] can we evolve an even better regime; one which provides the right regulatory balance.”
Sackman also echoed a call by Sir Julian Smith for all those involved in the funding industry to come within the remit of the Association of Litigation Funders’ voluntary code of conduct.
“Not all feel that current third-party funding arrangements always work in the client’s best interests,” she said. “Some have questioned funders’ role and level of control in legal proceedings, and that’s something, these weaknesses in the Pre-PACCAR regime, [that] we recognise… We’re now taking the time to consider the CJC report and its recommendations very, very carefully. It is essential to take this detailed and considered approach to what is a technical area.”
She added:
“We’re aware that many are eagerly awaiting the government’s response and I look forward to announcing our way forward in due course. The stakes here are high: access to justice; consumer protection; economic growth. We’ve got to get this right.”
Responding to questions on whether new legislation would apply retrospectively, Sackman said:
“On [the] question of retrospectivity, I think it’s highly unlikely, given the general rule of law principle against retrospectivity, that we would look to do that.”
The CJC report had recommended that the reversal of PACCAR should have full retrospective effect, consistent with the Litigation Funding Agreements (Enforceability) Bill proposed by the previous government in 2024, which fell before the general election.